May 31, 2022 - Economy

White House will give Fed "space to do its job" to battle historic inflation

President Joe Biden speaks with Federal Reserve Board Chair Jerome Powell in the background

President Biden announces the reappointment of Fed Chair Jerome Powell in November 2021. (Photo: Alex Wong/Getty Images

Ahead of a rare meeting with the chairman of the Federal Reserve, President Biden said on Tuesday that the White House's fight against inflation starts with respecting the Fed's political independence.

Why it matters: It's the latest sign the Biden administration is putting the Fed at the center of the battle to tame the decades-high inflation that's tanked Americans' view of the economy.

What he's saying: Biden told reporters that his plan to fight inflation "starts with a simple proposition: respect the Fed and its independence." He added the administration would give Fed members "the space they need to do their job."

  • Biden also noted that Fed members "have been laser-focused on addressing inflation like I am.”

Flashback: Biden's comment about respecting the political independence of the Fed is a sharp departure from former President Trump, who regularly criticized Jerome Powell for not moving quickly enough to cut interest rates.

Catch up quick: Both Biden and Powell — who met for the first time since Powell's reappointment, along with Treasury Secretary Janet Yellen — have said it's the Fed that is charged with containing prices rising at the fastest pace in 40 years.

  • Biden penned an op-ed in the Wall Street Journal on Monday that acknowledged that it's the Fed has the "primary responsibility to control inflation."
  • Powell, too, this month waved off a question about what the Biden administration or Congress could do to control inflation, saying that it was the Fed's job to maintain price stability.

The bottom line: The Fed is hiking interest rates at the fastest clip in decades in an effort to battle inflation, with more to come as Powell says the central bank won't back off until it sees prices coming down.

  • For now, the White House is signaling its support, even as the trade-off means a cooled-off economy (and heightened fears of an imminent recession).
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